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Leaf - sustainability (green) Image

Responsible ownership: Reshaping business as a force for good

Nov 13, 2019

On November 13, 2019, the World Economic forum (WEF) published a White Paper that revisits the roles and responsibilities of family shareholders in today’s context and proposes a forward-looking way of exerting their role, as well as a governance framework for family shareholders, their boards and executives who support long-term value creation.

All around the world, demand is rapidly growing for a new type of leadership capable of securing sustainable long-term value creation rather than short-term profit maximization. For decades, some owners have treated “responsibility” as the business model and have found that their returns are often superior to less principled approaches, especially when measured over the long term.

Family businesses are an important stakeholder group in this space, as they are often driven by the values and outlook of their founding families. Thinking and acting in a sustainable and long-term manner is deeply rooted in their DNA, with different levers to address global challenges, including their operating business with concentrated ownership, their investment vehicles, their philanthropic platform.

Review the press release and White Paper on the WEF's website.

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Canadian securities regulators outline corporate governance disclosure expectations for cannabis issuers

Nov 12, 2019

On November 12, 2019, the securities regulatory authorities in Ontario, British Columbia, Quebec, New Brunswick, Saskatchewan, Manitoba and Nova Scotia (the participating jurisdictions) published guidance to help cannabis issuers strengthen their governance disclosures, including disclosure of financial interests in significant corporate transactions.

The cannabis industry has experienced significant growth, along with merger and acquisition transactions (M&A Transactions), over the past few years. As the market has expanded, many cannabis issuers and their directors and executive officers have participated in the financing of other cannabis issuers, resulting in higher than usual crossover of financial interests. These interests may include overlapping debt and equity, or other business relationships. Staff in the participating jurisdictions have found instances where the quality of cannabis issuers’ disclosure in this area can be improved.

While the guidance is intended for cannabis issuers, all reporting issuers, especially issuers in other emerging growth industries, should ensure that governance disclosures address potential conflicts of interests. CSA staff will continue to monitor these areas. 

The CSA’s guidance can be found in Multilateral Staff Notice 51-359 Corporate Governance Related Disclosure Expectations for Reporting Issuers in the Cannabis Industry.

Review the press release on the CSA's website and the Multilateral Staff Notice on the participating jurisdictions' website.

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Is your board’s relationship with management built to withstand a crisis?

Nov 12, 2019

On November 12, 2019, the National Association of Corporate Directors (NACD) released a blog on how corporate crises that have a serious impact on an organization’s share price, reputation, and leadership are increasingly frequent events. Yet few companies are truly prepared to cope with such crises, and, in particular, with the challenge of deteriorating personal dynamics between a company’s executive management and its overseers—and within the boardroom itself.

This cultural dimension is often a fundamental weakness which, in the most severe crises, can threaten a company’s very survival.

This is the premise of a new joint report from McKinsey & Co. and NACD, titled “Building Board-Management Dynamics to Withstand a Crisis: Addressing the Fault Lines.”

Review the full blog on the NACD's website.

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Demand for sustainability assurance is growing

Nov 12, 2019

On November 12, 2019, the Journal of Accountancy published an article on how the demand for sustainability assurance is likely to grow in the coming years, according to a new survey conducted by The Conference Board.

Thirty-seven of the 57 large U.S. and European companies participating in the survey said they obtain assurance on at least some of their publicly reported sustainability information. Seventy percent of the companies that obtain this assurance said they expect that the need for sustainability assurance will increase over the next five years.

Review the full article on the Journal of Accountancy's website.

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Where do audit committees have opportunities to enhance disclosure?

Nov 11, 2019

On November 11, 2019, the National Association of Corporate Directors (NACD) released a blog on how the state of investor confidence in audit committees is strong in 2019, with a recent Center for Audit Quality (CAQ) survey finding that 81 percent of U.S. retail investors feel independent audit committees are effective in their investor protection role.

How can this foundation of confidence in audit committees be strengthened further? The CAQ believes that greater transparency about the audit committee’s role and responsibilities is key, as detailed in a new report by the CAQ and Audit Analytics on audit committee transparency.

Review the full blog on the NACD's website.

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Update – AASB expands key audit matter reporting

Nov 08, 2019

On November 8, 2019, the Auditing and Assurance Standards Board (AASB) released an update following the feedback it received on its Exposure Draft, Communication of Key Audit Matters in the Auditor’s Report.

After reviewing the feedback received, the AASB agreed to require key audit matter reporting for other listed entities, excluding listed entities required to comply with National Instrument 81-106.

Review the update on the AASB's website.

IFAC - Regulations Image

Accounting for value creation and encouraging the rise of the chief value officer

Nov 07, 2019

On November 7, 2019, the International Federation of Accountants (IFAC) released an article on how accounting for value creation needs rethinking.

Value is created through knowledge and creativity. Digital disruption is threatening entire industries. Financial markets are fraught with geopolitical and economic volatility. The deepening climate emergency, and other environmental issues such as water and land use, mean that business as usual is not an option.

In this world, achieving a resilient and sustainable business model has never been more challenging. Viewing value creation only through the lens of shareholders means undermining trust in the organization, compromising its reputation, and even threatening its license to operate. A broader set of data, information and insights is needed to provide a bigger picture of how value is created.

Review the full article on IFAC's website.

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Auditing in the crypto-asset sector

Nov 07, 2019

On November 7, 2019, the Canadian Public Accountability Board (CPAB) released its 2019 inspections insights on auditing in the crypto-asset sector. There are currently 48 Canadian reporting issuers with activities in the crypto-asset sector. Those activities include a variety of crypto-asset trading strategies and crypto-asset mining.

They found significant findings (deficiencies in the application of generally accepted auditing standards that could result in a restatement of the company’s financials) in seven of eight audit files inspected to date. Remediation remains in progress for some of those audits.

The five most common deficiencies include:

  1. Auditors did not have an adequate understanding of audit risks when they designed their audit approaches.
  2. Auditors relied on information obtained from crypto-exchanges and custodians without evaluating the reliability of that information.
  3. For entities that hold self-custodied crypto-assets, auditors did not obtain sufficient evidence to support the entities’ ownership claims to those assets.
  4. Auditors did not evaluate the reliability of information obtained from blockchains.
  5. For entities engaged in crypto-asset mining activities, auditors that limited their audit work to vouching crypto-assets received to the blockchain did not obtain sufficient audit evidence.

Review the publication on the CPAB's website.


Summary of the October 2019 CMAC meeting

Nov 06, 2019

On November 6, 2019, the International Accounting Standards Board (IASB) released a summary of the Capital Markets Advisory Committee (CMAC) meeting, which was held in London on October 10, 2019.

The topics discussed at the meeting included:

  • Rate regulated activities.
  • Post-implementation review of IFRS 10, IFRS 11, and IFRS 12.
  • Agenda consultation.

The next meeting will be held on March 26, 2020.

Review the press releasemeeting page and meeting summary on the IASB's website.

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How audit committees can improve disclosure

Nov 06, 2019

On November 6, 2019, the Center for Audit Quality (CAQ) released its 2019 Audit Committee Transparency Barometer. The Barometer tracks S&P Composite 1500 proxy disclosures to gauge transparency around audit committee oversight of the external auditor and other key financial reporting topics.

In addition to presenting statistics on disclosure trends, the Barometer offers disclosure examples to illustrate how audit committees are enhancing information for investors and others.

Review the report on the CAQ's website and a summary on the Journal of Accountancy's website.

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